Schafer: People giving up on work is another sign that this recession is worse


About three out of 10 Minnesota classroom teachers and unionized support staff are considering quitting or retiring this year, at least according to a recent survey by Education Minnesota, the state’s big teachers union.

Applications for pension benefits are also up a lot so far this school year. Yet most of the teachers thinking of leaving the field are a long way from retirement.

It’s not about pay. The job — classroom teacher, online teacher, infection control officer and front-line worker amid an infectious disease pandemic — has simply gotten harder.

It’s not just teachers who seem to be thinking like that. All over the country, people are giving up on work. The labor force participation rate is sinking.

This is telling us something important about the costs and benefits of work, something that employers and policymakers ought to be thinking more about.

Here in Minnesota the unemployment rate just dropped again, down to 6% in September, according to data last week from the Minnesota Department of Employment and Economic Development. Yet that’s largely because of the number of people who dropped out of the labor market.

That means they are not working anymore and they are not really looking for work.

One explanation for a lower participation rate is obvious: job losses are still continuing. On top of that, people appear to be putting off job searches until the odds improve that they can find a good job. There are twice as many unemployed in the country, at last count, than there are job openings.

Yet Minnesota employers are diligently looking to hire, said DEED Commissioner Steve Grove last week. In many parts of the state, particularly for manufacturers, he said, the labor market doesn’t look that much different from what it did last year, at the end of a decadelong economic expansion.

“These are the jobs that pay 15%, 16% more than the average job in the state,” Grove said, “and [employers] are still finding a tight labor market. I don’t know if there’s a manufacturer I’ve talked to who hasn’t said they’re hurting for finding people.”

Minnesota remains a leader in workforce participation, at 68.4%. Yet that rate was more than 70% in February, and it declined sharply in just the last month.

As least we don’t have the problem of states such as Missouri. Last week the governor was crowing about the sharp decline in his state’s unemployment rate, down to 4.9%.

Yet the state’s own report showed that, in just one month, Missouri’s civilian workforce slipped 2.3%, a different measure than labor participation rate but a far more concerning drop than we had here in Minnesota.

With unemployment insurance benefits now exhausted, thousands of people in Missouri are simply leaving the labor market.

This isn’t quite the kind of behavior typically seen recessions, by the way. During the Great Recession of the 2000s, the so-called quit rate, meaning people who quit their jobs (hopefully for a better one), bottomed at 1.2%. If you had a job, you tried to keep it.

That rate of people quitting inched up steadily through the long economic expansion that followed, but even after the shock of massive job losses this year the quit rate is still much higher than it was in 2009.

In the basic equation people use to assess the value of a job, something must have changed.

There was once a popular notion in economics that work was all “disutility,” meaning that working was a drag from the time you started until the time you clocked out. The only thing that added to the life of the worker was getting paid.

If the value of the pay and benefits exceeded the “cost” of the work, then it was a job worth doing.

More recently we came to better understand the benefits from work besides the paycheck, from good friends at work to the satisfaction that comes from getting something done.

But at some point, there could come the point when the decision still could go the other way, as costs outweigh the benefits. And of course the additional costs this year are all about the effects of the coronavirus pandemic.

Retail workers have had to confront shoppers who refuse to properly wear their masks, and the break room that used to be a fun spot to catch up with friends might be closed and so on.

And leaving home for work, “that’s a part of most people’s job,” said Aaron Sojourner, labor economist and professor with the University of Minnesota’s Carlson School of Management. “The vast majority of people can’t do their work remotely, even now. That means, whatever their job was like before, something bad just got added to it.”

“And ideally,” he added, “what would happen is your employer would somehow recognize that and offset it, by raising your pay.”

The obvious problem with that is that if sales and profitability have slipped in a challenging year, then the value of what the worker contributes has slipped, too.

A hard-pressed employer won’t think now is the time to raise wages.

“The virus is not going in the right direction, and safety is clearly a concern,” DEED’s Grove said when I asked him about the higher cost of work. “You are not seeing the same [worker] shortages … in the jobs in which you can work from home.”

Yet he sounded optimistic that with more time and greater awareness of open jobs, workers will start finding them. He pointed out that employers have now had seven months to figure out “how to get safety right” in their facilities.

“You look at these weddings, and social gatherings and large outdoor convenings that are being super spreader events or moments when the virus spreads,” he continued. “They are far more dangerous than a safe workplace.”

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